Senate Economics Legislation Committee, , 9:00:43 to 9:05:54
Discussion on the fuel tax credit scheme and whether its removal would function as a carbon tax.
Topics: Fuel excise, Climate change, Emissions reduction
Speakers: Senator Susan McDonald, Hon Tim Ayres, Dr Shane Johnson, Katrina Di Marco, Unknown Speaker, Senator Lisa Darmanin
Alright, terrific. Thank you for that advice. So turning back to fuel tax credits. A report was published this morning that studied the impact of removing the fuel tax credit scheme. Found removing the scheme would impose a carbon tax of 198 per tonne. Are you familiar with that report?
I'm not, Senator.
Right. So do you agree that fuel excise is designed to collect revenue from motorists who use the public road network?
And that's certainly the stated policy intent of fuel excise, Senator.
By that logic, if a business that doesn't use public roads is forced to also pay fuel excise, do you agree that the government would be taxing the carbon produced by that business?
It's kind of theoretical proposition that we really asking the official to express that again about a tax measure that's not been contemplated.
So the the idea of removing fuel tax credits is very topical and the government is allowing it to be kicked around the Senate regularly. I'm sure that we'll get some questions from some of my colleagues soon. I'm seeking to understand. Okay, so before the 2022 election, the Prime Minister ruled out that there will be no carbon tax ever. So would you agree that Minister ruling out the carbon produced by businesses by ruling out the fuel tax? Removing the fuel tax credit scheme would make sense.
The government is not contemplating those measures. I understand it's topical, but our job is to deal with what's real, not what's topical.
Okay. Has the government done any modelling on the impact of removing the fuel tax credit scheme on the Australian economy? Sorry, that's probably best put to the government. Yeah, I'll let officials answer that, of course.
But that is not something that the government is considering I'm not aware of
any modelling on the impact of removal from the on the on the economy.
Okay, thank you. Um documents obtained from Treasury under FOI say the fuel tax credit scheme reflect the principle that taxes should not apply to business inputs. Is that still Treasury's view?
Um That's that's the rationale for the scheme, still Treasury's view.
Do you think removing the fuel tax credit scheme and making businesses pay fuel excise reflects this principle given that fuel is an input cost? Fuel is a key input cost for many of the businesses that use the fuel tax credit scheme. If they are forced to pay more for fuel because the fuel tax credit scheme was removed, do you think that would have an impact on inflation?
It's probably not for macroeconomic group.
Okay.
I'm sure there's a standing order somewhere that that prevents officials being asked questions about utterly hypothetical propositions.
Um it's certainly clear that I wouldn't have thought that it would be unreasonable to explore Treasuries. You know, we've we've we've discussed a range of other policy areas. Fuel tax credits is an important one too. But Australia businesses.
We're not considering you've asked officials are that are they doing modelling work in this area? The answer has been no. Um you've asked me, are we considering the answer is no? I'm I'm not sure how much further we can help you uh on this question. It's certainly true uh that elevated uh diesel um and jet fuel and petrol prices uh as a consequence of the the the war in the Middle East do feed for through in the Australian economy in an inflationary way. They are the principal contributor to uh inflation in the Australian economy uh today. Uh but in terms of the the measure itself I I don't think we can tell you much more. Um the the the other questions, of course you've been asking questions about you know different measures and that they have been real measures that the government has been engaged in. That's completely reasonable. But in relation to this issue, um I I don't think we can help you much more.
All right, I'll just have a final uh question then. The Chair of the Climate Change Authority, Government Agency, has called for the fuel tax credit scheme to be abolished on emissions reduction grounds. Has the government done any modelling on whether abolishing the fuel tax credit scheme would lead to emissions reductions?
So these are questions for macroeconomic group, but I can say not to my knowledge.
Okay. Thank you, Senator McDonald. Um Senator McKeeman.